Analysis On The Effects Of Urban Public Expenditure On Total Factor Productivity

New classical economics think the growth of production factor inputs and the growth of total factor productivity are the main causes of economic growth.The scarcity of resource means that the economic growth relying on production factor inputs is not sustainable.Only the improvement of total factor productivity is the source of sustainable economic growth.After the reform and opening up,China's investment rate rises rapidly from 19.62%to 80.56%.At the same time,the "demographic dividend" occurs,the labor force rises sharply.We can say that China's economic growth since reform and opening up is mainly driven by factor inputs.The decline trends in the economic growth since 2011 confirms the viewpoint of new classical economics that the economic growth relying on production factor inputs is not sustainable.On the one hand,the investment rate and the demographic dividend will face a turning point,they can not rise persistently.On the other hand,the factor inputs will encounter diminishing returns at a certain size.So when the economic growth reaches a certain stage,it will face a painful adjustment period.So China's economic growth mode needs to transform from factor inputs-driven mode to total factor productivity-driven mode.Then what role will the government intervention play in the transformation?What kind of impact will the government's behavior bring to total factor productivity?The research on this problem will be meaningful to the transformation of the economic growth mode and the improvement of economic growth quality.City is the "space club" of various resources,the heart region of economic growth,and the main carrier of economic operation.In 2015,China's urbanization rate has reached 56.1%,the scholars forecast that the process of urbanization will continue until 2030.Until then,the urbanization rate will reach 70%.So the quality of the city's economic development is directly related to the quality of China's economic development in the future.Therefore,different from literatures that measure the total factor productivity from the provincial level,this article measures the total factor productivity from the city level.In addition to measuring the total factor productivity,this article also decomposes the total factor productivity change into efficiency change and technology change by the method of DEA-Malmquist,also decomposes the total factor productivity change into capital factor productivity change,labor factor productivity change and land factor productivity change by the method of SBM-Luenberger.This article also make regression analysis on the relation between public expenditure and TFP,infrastructure investment and TFP,public R&D expenditure and TFP,public education expenditure and TFP to clarify the relationship between them,in order to provide a reference for the government to make economic policies.This study aims to measure the total factor productivity improvement of Chinese cities in 1998-2013,to evaluate the quality of China's economic growth.On this basis,we evaluate the government behavior's influence on the total factor productivity,providing a reference for government to make reasonable economic policy.Another aim of this study is to judge the reasonable rate of urban public expenditure and the ideal structure of public expenditure.Firstly,this article gives a theoretical deduction on the relation between public expenditure and the total factor productivity,gets the conclusion that public expenditure has a promotion effect to the total factor productivity by providing public services.Also it has an inhibiting effect to the total factor productivity by stimulating private investment,strengthening the extensive economic growth pattern.Secondly,this article gives s statistical description on the cities' public expenditure.Thirdly,this article decomposes the total factor productivity change into efficiency change,technology change using the DEA-Malmquist method,decomposes the total factor productivity change into capital factor productivity change,labor factor productivity change and land factor productivity change.Finally,this article make individual fixed effects regression and system GMM regression respectively to the relationship between ISPTFP and public expenditure,infrastructure investment,public R&D expenditure and education expenditure.Also,this article make individual fixed effects regression and system GMM regression respectively to the relationship between DEATFP and public expenditure,infrastructure investment,public R&D expenditure and education expenditure to test the results for robustness.We get the conclusions as follows:Firstly,either for the SBM-Luenberger method or for the DEA-Malmquist method,the total factor productivity of Chinese cities in 1998-2013 shows an obvious downward trend.According to the results of SBM-Luenberger method,the total factor productivity fell by 23.03%cumulatively,technical efficiency rised by 4.44%cumulatively,technology growth rate fell by 27.47%cumulatively,capital factor productivity fell 60.71%cumulatively,labor factor productivity rised by 8.63%cumulatively,land factor productivity fell by 17.02%.According to the results of DEA-Malmquist method,the total factor productivity fell by 39.03%cumulatively,technical efficiency rised by 12.17%cumulatively,technology growth rate fell by 41.81%cumulatively.The reason for the total factor productivity's retrogression may lie in:The technological change in total factor productivity is Hicks neutral technological change,not including capital embodied technological change;The fast capital formation leads to the decrease of the capital factor productivity;China's investment rate may be overvalued;Rent-seeking behavior dampens productivity progress;Owing to the long construction period,the infrastructure has not yet played its role.Secondly,the expansion of public expenditure has an inhibiting effect to the urban total factor productivity.Among them,the public expenditure of current year has an significant inhibiting effect,the public spending of last year has a significant promotion effect,the public expenditure of the previous year also has a promotion effect,but it is not significant.This means that China's public expenditure will promote the total factor productivity by providing public service,but also it will inhibit the total factor productivity by strengthening the extensive economic growth mode.The reason for the inhibiting effect lies in:First,the current appraisal and selection system of government officials emphasis too much on GDP,this phenomenon leads to excessive expansion of public expenditure scale,severe structural deflection and the low efficiency of public spending.Second,the lack of public demand's expression mechanism to public goods leads to information asymmetry between public goods providers and demanders.Third,the government's "offside" and "absence" coexist in the process of public expenditure.Fourth,the public expenditure management and control mechanism needs to be perfect.Fifth,the lack of unified and long-term planning for public goods supply leads to the public goods' poor coordination ability and unefficiency.Thirdly,the influence of urban infrastructure on total factor productivity is not significant.According to the regression results of the static and dynamic panel model,the influences of three phases of urban infrastructure investment on total factor production are all not significant.The infrastructure investment does not promote the total factor productivity as expect,the reason lies in:On the one hand,it will stimulate private investment,strengthen the extensive economic growth pattern,and then inhibit the total factor productivity.On the other hand,a series of problems in the process of the infrastructure construction leads to the low efficiency of infrastructure.First,the lack of unified and long-term planning of urban infrastructure construction leads to the infrastructure's poor coordination ability and unefficiency.Second,urban infrastructure construction often pays too much attention to short-term benefits,but despises long-term benefits.Finally,urban infrastructure management system and operation mechanism is not sound,it needs to be improved.Fourth,the promotion effect of public R&D expenditure on total factor productivity is not significant.In the long run,it even has certain inhibiting effect.The reason why the public R&D expenditure has inhibiting effect may be that:(1)The influence of public R&D expenditure on total factor productivity has heterogeneous threshold effect.(2)There is a failure in the government intervention to technology innovation activities.The failure derives from the following aspects:the government is lack of information about the scientific research institution and scientific research personnel's technical innovation ability,so the allocation of scientific research funds is not reasonable and its efficiency is low.The information asymmetry can even lead to adverse selection;There may be moral hazard in the process of R&D expenditure,scientific research funds is not arranged reasonably,then huge waste occurs in scientific research funds;There may be rent-seeking activities in the process of the scientific research funds allocation;The base method in the R&D budget solidifies the fiscal expenditure structure,scope of supply and profit distribution pattern.Fifth,both the regression results of static panel model and dynamic panel model find the influence of public education expenditure on total factor productivity is not significant.The reason may be:(1)Human capital accumulation is a long-term process,education,especially basic education can not directly improve the human capital and promote technological progress.(2)Too rapid expansion.without increasing the number of teacher supply may lead to the inefficiency of education resource allocation.(3)There are many problems in the education funds allocation between different regions,between urban and rural areas,between different education levels.